Minister Ngige, NSITF mgt. in scandal of illicit multi billion Naira tax deductions from 5,000 workers

The Minister of Labour and Employment, Dr. Chris Ngige, has been linked to an allegation of illicit tax deductions from the salaries of over 5,000 workers with the Nigeria Social Insurance Trust Fund (NSITF), in collaboration with the management of the Trust Fund.

Some of the victims of the illicit deductions alleged that the funds realized from the illegal deductions amount to billions of Naira.

The alleged illicit tax deduction was said to be implemented in the payment of the Federal Government’s new minimum wage approved by President Muhammadu Buhari in all ministries, departments, and agencies (MDAs) of the public and civil service of the Federation in 2019, after extensive negotiations with the Organised Labour. Beneficiaries of the new minimum wage cut across all grade levels of civil and public servants.

The new minimum wage was said to be documented by the National Salaries, Income and Wages Commission (NSIWC).

How the illicit tax deduction was implemented in NSTIF

The Nigeria Social Insurance Trust Fund (NSITF) had consented to implement the new minimum wage, which accumulated over time, in lump sum over scheduled period.

The NSITF had commenced the payment on April 1, 2022, including the alleged illicit deductions from the earnings of the Fund’s staff.

The NSTIF management had scheduled to make the second payment on June 30, 2022, and the third payment on September 30, 2022, before probably regularizing the implementation in monthly salaries.

The NSTIF workers’ union raised an alarm, accusing the Labour Minister, Ngige, of collaborating with the NSTIF management, to illegally make deductions in the instalment payment of the N500, 000 of the workers accrued minimum wage, “depending on salary levels of each employee”.
An investigative report revealed that: “…someone who received N500, 000 as his first tranche got N250, 000 in the second;” cited the victim, a staff of NSTIF, to have said: “and we don’t know how much would get to us in the last tranche.”

The workers had complained that “there were no defined benchmarks as to what type of tax and percentage of deductions adopted”.

One of the victims was cited to have protested: “There were no defined parameters to which the deductions were made.

“In my case, I ought to receive N1.5 million for the three tranches, N500, 000 per tranche.”

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The victim had admitted receiving N500,000 in the first instalment; and received about N300, 000 rather than N500, 000 in the second instalment; implying a deduction of about N200,000. The victim stated that the deduction was implemented ‘without any details or formal documents listing the taxes deducted from the accrued salary increment’.

The report summarized: “That means from the second tranche, about N200, 000 was deducted by the management of the Trust. But the third deduction is yet to be pulled out due to the growing concerns raised by the aggrieved workers.”

Another victim was cited to have stated: “We had no issue during the first payment.

“It was a week to pay the second tranche that the story of a tax deduction emerged.”

The victim, a staff of NSTIF, had expressed a phobia that about 60 per cent of the N1.5 million would be deducted from the accrued sum.

A senior management staff in the NSTIF, confirming the deductions, said that the process is not transparent.

The staff complained: “I should be cruising this year based on my calculation but the management has not been transparent to us.”

According to the staff, “We got the first one. To pay the second and third, we were told that there are taxes to be paid.”

A principal officer at the NSTIF had revealed that he was paid N150, 000 in place of the N500, 000 in the second installment, complaining that N350, 000 was deducted as tax.

The principal officer declared: “We have been paying our normal taxes for years, but when the government approved the new minimum wage, they came up and said we were not paying the right taxes and they failed to make public the percentage for the deductions.

“They have even told us we should not expect any amount from the third tranche.”

The Association of Senior Staff of Bank, Insurance and Financial Institution (Domestic Unit), the umbrella union of the NSTIF workers, had opposed the illicit tax deductions, protesting that it is fraudulent.

The Association of Senior Staff of Bank, Insurance and Financial Institution (Domestic Unit) raised an alarm that the union leaders were “arm twisted” by the Minister, Ngige, and the NSITF management into signing undisclosed agreements on behalf of the employees.

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The workers protested: “We were given a timeline for this payment. After paying the first tranche that was carefully calculated from January 2019- March 2022 (36 months), the minister and management started playing games about a non-existing tax regime that will eat up to 40 – 50 per cent of the arrears.

“Both the Minister and management arm twisted the union into signing a bogus and fraudulent tax deduction from our arrears.

“The deduction of this seemingly fraudulent tax ranged from N200, 000 to N500, 000 naira per staff. This amount runs into billions based on a calculation of more than 5000 staff.”

Beyond the internal union, workers alleged compromise by the NLC, a faction of which was accused of receiving a bribe; and another faction being actionless.

Tax deductions from the salaries of public servants were identified to include the Payee, payment to the National Housing Funds (NHF), Contributory Pension Scheme (CPS). However, a report of an investigation detected from the pay slip of one of the NSTIF workers, that the deductions made by the Fund include Housing, Transport, PFA (Contributory Pension), NHF, PAYEE, Union, Cooperative, and Union. Others include car loans, FGN Housing loans, and Salary advances.

The pay slip revealed that deductions from the staff salary only included: PFA: N12, 604.43 NHF: 1,547.70, PAYE:/Tax: N5, 806.35 and Union: N1, 238.16. These were official deductions.

The question has been, how did the minister and NSTIF arrive at the deduction of over N200,000 and more in the payment of the accrued N500,000 three installment payment of accumulated new minimum wage.

The Executive Director, Administration of the NSTIF was cited to have in a memo, ref. number, NSITF/AC/DIR/ADMIN/5/S.13/26, communicated the confirmation of the salary upgrade for all staff from Grade Level 03 to Grade Level 17 of the Fund by the NSITF management.

The confirmation, dated April 13, 2022, indicated the payment will take effect from April 2019; with the classification that grade levels 03 to 07 would receive 23.2 per cent upward review, officer II to the senior manager, grade 08 to 14, 14 per cent salary increase, and principal and general managers on grade level 15 to 17 officers, to receive from 10.5 per cent salary increase.

·         Source: The ICIR